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Message from the President Takashi Yokokura TOPCON CORPORATION, founded in 1932, originally the surveying instruments division (presently Positioning) of K. Hattori & Co., Ltd. Since that time, we have expanded and diversified into ophthalmic and medical instruments (presently Eye Care), cameras (withdrew in 1980), and industrial instruments (presently Finetech). Looking to expand our business in the positioning market, the Company established a machine controls business in 1994. Through a subsequent purchase of a U.S. global positioning technology company in 2000, we established an even stronger presence in the GPS market.
Our growth from 2004 to 2006 in this business was nothing short of remarkable. Having established development, manufacturing and sales locations around the world, we have quickly become a true global company. In fact, a full 76% of our sales are through overseas sources (as of Q3, FY 2009). In 2008 we successfully integrated with Sokkia Co., Ltd., a company in the surveying instruments business. This management integration has helped the Company create a structure to compete globally on an equal footing with any firm in our business space. Although the United States appears to have weathered the worst of the current economic recession, the effects of the global financial crisis are still echoing through the markets of Europe and the U.S. On the other hand, China and other emerging economies are trending toward recovery—gradual as that trend may be. In Japan, the mood reflects a belief that the markets are beginning to recover from recent historic lows. Still, the global economic recession, the strong yen, and deepening employment worries have combined to form a continued economic malaise.
TOPCON Group consolidated third quarter Net Sales for FY 2009 amounted to ¥64,305 million, representing a 24.5% year-on-year decrease. This was a result of the further market deterioration in Japan and Europe/United States for our Positioning, Eye Care and Finetech business segments. Despite Group-wide cuts in fixed costs, these initiatives did not outpace the reduction in Net Sales. Consolidated Operating Loss amounted to ¥3,383 million (a ¥4,299 million year-on-year decline), while Ordinary Loss amounted to ¥3,746 million (a ¥3,184 million year-on-year decline). The Group’s quarterly Net Loss amounted to ¥3,947 million (a ¥1,422 million year-on-year decline).
Our Positioning Business enjoyed solid growth in China and other emerging countries; however, the effects of the global recession—particularly in the United States and Europe—resulted in a 22.7% year-on-year decrease in consolidated Net Sales, down to ¥34,285 million. While the Group engaged in aggressive cuts in fixed costs, the decline in Net Sales could not be completely offset. Accordingly, the Group recorded a consolidated Operating Loss of ¥2,102 million (¥1,216 million year-on-year decline) for this segment.
Our Eye Care Business experienced favorable results for products tailored to domestic ophthalmologists; however, the recession in the United States and Europe had a significant impact on earnings for the segment. The Group experienced a 9.7% year-on-year drop in consolidated Net Sales to ¥22,128 million in this segment, with the decline in revenues driving consolidated Operating Income down to ¥144 million (93.7% year-on-year decrease).
Our Finetech Business experienced a drop in projector-related products for the Chinese market—a business that had been performing well during the same period in the prior fiscal year. The recession in the semiconductor market also played a role in a 51.8% year-on-year decline in Net Sales, down to ¥7,891 million. This drop in top-line sales was the main factor behind an Operating Loss of ¥1,425 million (a ¥932 million year-on-year decline) recorded for the segment.
The TOPCON Group intends to compete and win in the global market, ensuring profitability and sustainable growth. In pursuit of the spirit of “monozukuri” (conscientious manufacturing)—the essence of the manufacturing industry—we are working to establish a reputation as a highly profitable firm, producing the best-quality products at the lowest cost. We will continue to pursue our TM-1 (“Time to Market No. 1”) activities, adopting revolutionary approaches in each Group division and regional location to create a truly superior global company.
Co-existing with society is corporate philosophy of the TOPCON Group. Group companies are active in—and conscientious about—global environment programs, social contribution activities, corporate governance and compliance.
A top priority of the TOPCON Group is to be an entity that positively responds to the trust of shareholders, investors and other stakeholders. Our ideal is to be a company that continues profitable sustainability. We ask for your continued support in our efforts.
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